Highlights
March 2004
In March 2004, prices for the goods and services included in the Consumer
Price Index (CPI) basket were on average 0.7% higher than in March 2003.
This 12-month increase was identical to February’s which was the
smallest since December 2001.
An important factor in explaining the weakening of the 12-month increases
during the first three months of 2004 was the strong monthly increases
in the index, due mainly to energy prices, over the same months of 2003
(see base effect box).
If energy had been excluded from the CPI, the 12-month change in March
would have been 1.2%, a slight increase from the 1.1% registered in February.
The all-items index excluding the eight most volatile components, as
defined by the Bank of Canada, rose 1.3% from March 2003 to March
2004, compared with 1.1% in February.
Between February and March 2004, the CPI rose 0.3%, pushed up in large
part by higher gasoline prices. The CPI has been relatively stable over
the previous ten months, making this 0.3% advance the largest since March
2003.
The all-items index excluding the eight most volatile components, as
defined by the Bank of Canada, also increased 0.3% on a monthly basis.
Price increases for travel tours, clothing and automotive vehicles were
among the main factors to exert upward pressure.
Base effect:
The 12-month variation in the CPI is calculated by comparing the
most current month’s index with the index for the same month
of the previous year. In the chart below, the 12-month change is
represented by the gap between the two curves. Thus, the 12-month
variation can decrease from one month to the next merely due to
the fact that the base serving as the point of comparison increased.
As can be observed from the chart, the behaviour of the index in
2003 is going to be a very important factor in explaining the variations
in the 12-month percentage changes up until April 2004.
All-items Index, Canada, Indexes (1992=100)
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Twelve-month percentage change in the CPI: +0.7%
Twelve-month percentage change in the CPI excluding energy: +1.2%
Important factors contributing to the 0.7% increase in the CPI included
homeowners’ replacement cost, cigarettes, tuition fees, restaurant
meals, homeowners’ insurance premiums and automotive vehicle insurance
premiums.
Lower prices for gasoline, automotive vehicles, fuel oil, computer equipment
and supplies, natural gas and traveller accommodation exerted downward
pressure on the 12-month increase in the CPI.
Homeowners’ replacement cost, a measure of the depreciation of
a house estimated by the changes in the price of new housing (excluding
land), was up 5.8%.
Cigarette prices were 7.8% higher than in March 2003. This increase was
primarily due to higher provincial tobacco taxes introduced in the last
twelve months in most provinces.
Percentage Change from the Same Month of the Previous Year, Canada
Tuition fees increased on average 8.1%. Although they are only collected
once a year, in September, they continue to be one of the important factors
impacting the 12-month change in the CPI. The average increase in tuition
fees for the previous three years had been 3.8%.
Consumers paid an average 2.3% more for restaurant meals.
Homeowners’ insurance was up 10.8%, while the increase in automotive
vehicle insurance premiums from March 2003 to March 2004 averaged 3.8%.
Gasoline prices were 4.2% lower than in March 2003.
Despite a month-over-month increase, automotive vehicle prices are still
2.4% lower compared to March 2003 levels.
Fuel oil prices fell 19.3%, with price drops ranging from 23.2%
in Quebec to 8.4% in Newfoundland and Labrador.
Computer equipment and supplies prices fell 16.7% since March 2003.
Traveller accommodation prices, which have been trending down since mid-2001,
fell 8.0% from March 2003.
Monthly percentage change in the CPI: +0.3%
Monthly percentage change in the CPI excluding energy: +0.2%
Between February and March this year, the CPI increased 0.3%. This was
the largest advance since March 2003.
The CPI has been relatively stable over the previous ten months, increasing
an average of 0.1% per month, with no increase or decrease larger than
0.2%.
Higher prices for gasoline, travel tours, women’s clothing and
automotive vehicles exerted upward pressure on the all-items CPI.
Downward pressure came from price decreases for natural gas, computer
equipment and supplies, as well as meals from fast food and take-out restaurants.
Excluding the influence of energy prices, the CPI increased 0.2%.
Gasoline prices rose on average 2.7%, accounting for approximately a
fifth of the total upward pressure on the index. Price increases were
widespread across provinces and ranged from 0.6% in Ontario to 7.2% in
Alberta. Crude oil prices have jumped 30% since last September.
In March 2004, the travel tours index increased 5.5%, following an 11.9%
increase in February. Increases of this magnitude are typical over this
period.
Women’s clothing prices increased on average by 2.0% in March.
This was mostly due to a mixture of price increases on new summer stock
and the return to regular prices from discounts in the previous month
for several clothing items.
Automotive vehicle prices rose 0.3% after decreasing by 1.9% in February.
After increasing in February, the natural gas price index decreased 2.5%
in March, mostly under the pressure of price declines in Alberta.
The 2.6% price drop for computer equipment and supplies, as well as the
0.8% decline for meals from fast food and take-out restaurants also exerted
downward pressure.
The seasonally adjusted CPI increased 0.1% from February to March
After seasonal adjustment, the CPI increased 0.1% from February to March.
Higher seasonally adjusted indexes for transportation (+0.6%), health
and personal care (+0.8%), recreation, education and reading (+0.2%),
and alcoholic beverages and tobacco products (+0.6%) accounted for this
increase.
The index for clothing and footwear (-0.3%) exerted some downward pressure.
The seasonally adjusted indexes for food, shelter, and household operations
and furnishings remained stable.
Special aggregates
All-items excluding the eight most volatile components (Bank of Canada
definition)
The all-items index excluding the eight most volatile components, as defined
by the Bank of Canada, rose 1.3% from March 2003 to March 2004. This follows
an increase of 1.1% in February which was the smallest 12-month increase
since September 2000.
The exclusion of the effect of decreasing gasoline prices and increasing
cigarette prices explains most of the difference between the 0.7% rise
in the all-items CPI and the 1.3% rise in this index.
From February to March 2004, the all-items index excluding the eight most
volatile components, as defined by the Bank of Canada, increased 0.3%.
Price increases for clothing, travel tours and automotive vehicles were
among the main factors to exert upward pressure. Price decreases for computer
equipment and supplies, as well as meals from fast food and take-out restaurants
moderated these pressures.
Energy
Energy prices fell 4.1% from March 2003 to March 2004.
Lower gasoline prices (-4.2%), combined with weaker fuel oil (-19.3%)
and natural gas prices (-6.8%) accounted for the decline. Over the same
period, electricity prices increased slightly (+0.2%).
From February to March, energy prices increased 1.0%, due mostly to price
increases for gasoline (+2.7%). Downward pressure came from lower prices
for natural gas (-2.5%) and electricity (-0.1%).
Goods and services
From March 2003 to March 2004, prices in the goods sector decreased 0.9%
after posting a 0.8% decrease in February.
Most of the downward pressure came from the durable goods index (-2.4%),
mainly as the result of lower prices for automotive vehicles, and computer
equipment and supplies. The non durable goods index decreased 0.2%, as
falling gasoline and fuel oil prices were partly offset by higher cigarette
prices. The semi-durable goods index fell 0.6%, as about two thirds of
the goods recorded price decreases.
Widespread price increases caused the services index to climb 2.2% compared
with March 2003. Higher homeowners replacement cost, tuition fees and
homeowners’ and automotive vehicle insurance premiums were somewhat
offset by lower prices for automotive vehicle leasing and traveller accommodation.
Between February and March 2004, the increase in the price of goods averaged
0.5%.
Non-durable goods prices rose 0.5%, mostly under the pressure of higher
gasoline prices. Price increases for women’s and men’s clothing
as well as for footwear explained most of the 1.2% increase in the semi-durable
goods index. The durable goods index was pushed up 0.3% mainly under the
influence of higher automotive vehicle prices.
Higher cost for travel tours (+5.5%) was the main contributor to the
0.2% increase in the services index between February and March 2004.
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